Blueprint for Missouri

Issue Area 01

Economy

An economy that works for Missourians allows people to earn a living, invest, and start businesses.

3 Policies

Issue Area 02

Education

Missouri’s education system should empower families with real choices, operate transparently, and hold schools accountable for results.

5 Policies

Issue Area 03

Health Care

Health care should be easier to access, easier to understand, and more affordable for patients.

2 Policies

Issue Area 04

State and Local Government

Governments should be transparent, responsible with taxpayer money, and focused on essential services.

7 Policies

17 Policy Recommendations

The full Blueprint

Each policy is a self-contained working document: the problem, the evidence, the proposal.

Economy

3 Policies

Occupational Licensing

Cut barriers that keep Missourians out of the trades they’re qualified to enter.

Economic Development Subsidies

Stop picking winners; reduce TIF, tax-credit, and grant programs that distort markets.

Nuclear Energy

Permit, build, and operate small modular reactors to meet Missouri’s grid demand.

Education

5 Policies

Statewide School Choice

Empowering families with real options across public, charter, and private pathways.

Education Funding Formula

Reform the formula so dollars follow students and incentives reward outcomes.

School Report Cards

Plain-English accountability metrics every parent can read and act on.

Missouri Parents’ Bill of Rights

Codified rights to records, curriculum, and meaningful participation.

Early Literacy

Evidence-based reading instruction beginning in kindergarten.

Health Care

2 Policies

Free-Market Healthcare Reform

Direct primary care, telemedicine, and association plans as real alternatives.

Healthcare Price Transparency

Prices posted, plainly, before treatment — by procedure, by facility, by physician.

State and Local Government

7 Policies

Income Tax Reform

Flatten brackets, broaden the base, and lower the rate Missourians actually pay.

Property Tax Reform

Caps, exemptions, and assessment fairness for Missouri homeowners.

Budgetary Reform

Bring obligations back into line with revenue, not the other way around.

Taxpayer Bill of Rights

Codified protections so Missourians know what their tax dollars can — and can’t — do.

Office of Government Efficiency

An accountable, mission-specific office to audit how state government actually runs.

Local Government Transparency

Open records, open meetings, and open budgets — by default, not by request.

Welfare Reform

A welfare system that helps Missourians rise, not one that traps them at the bottom rung.

The post Blueprint for Missouri 2026 appeared first on Show-Me Institute.

Shortly before the end of last year, the auditor’s office released a report urging lawmakers to take “immediate action” to curb the trend of deficit spending before more drastic cuts become necessary. For longtime readers of the Show-Me Institute blog, this assessment will sound familiar. The report reinforces concerns that have been visible in Missouri’s budget data for more than half a decade.

Reviewing recent revenue and spending trends helps illustrate the problem. Between 2020 and 2025, Missouri’s general revenue collections increased by 45.8 percent, largely driven by income and sales tax growth. Over the same period, general revenue expenditures increased by 53.4 percent. That spending growth more than doubled the rate of inflation, which rose 24.5 percent during those years. Even strong revenue growth was not enough to keep pace.

This imbalance was made possible by a temporary windfall. Although Missouri operates under a constitutional balanced budget requirement, lawmakers were able to commit to higher spending because of a large influx of federal COVID relief funds, combined with stronger-than-expected tax collections. That surge produced a record general revenue balance of nearly $6 billion in 2023. Rather than treating those conditions as temporary, the state locked in higher ongoing spending through pay raises and program expansions, among other things. Since then, the surplus has been largely exhausted.

Looking ahead, fiscal pressures are likely to get worse. Governor Kehoe’s recent budget recommendations project a decline in expected revenues this fiscal year and only minimal growth in Fiscal Year 2027. The outlook deteriorates further when you consider the chance of an economic downturn. Using the worst three-year revenue decline Missouri experienced between 2003 and 2025, the auditor estimates the general revenue fund would be depleted by 2027. Under that scenario, the state would face a deficit exceeding $3.8 billion. And while Missouri’s Budget Reserve Fund (rainy day fund) holds approximately $950 million, as I’ve written before, constitutional restrictions sharply limit its usefulness in addressing an ongoing budget shortfall.

As the general assembly begins working on next year’s budget, the auditor’s report should remain front of mind. There’s still time to rein in the state’s out-of-control spending if Missouri’s lawmakers are willing to start making the tough decisions that right-sizing government entails. The question is no longer whether adjustment is needed, but instead how long until fiscal disaster strikes.

The post The Auditor Confirms Missouri’s Budget Problem appeared first on Show-Me Institute.

Missouri voters approved Medicaid expansion as a constitutional amendment in August of 2020, during the height of the COVID-19 pandemic. Due to legal challenges and various technical issues, expansion-eligible Missourians didn’t begin joining the program until October of 2021. As I stated in part one of this series, because of COVID’s impact on the program as well as the federal rules accompanying the increased funding, it’s been nearly impossible until now to fully analyze the rollout of Medicaid expansion.

Before voters weighed in on the measure, expansion supporters made several claims about how the policy would impact Missouri. At the time, I wrote repeatedly about three of their key claims with which I disagreed. First, they estimated that fewer than 250,000 people would enroll within the first year. Second, they said the expansion enrollees would be “newly eligible” for the program, which is something the federal government requires as a condition of receiving extra federal funding. And third, they said the expansion wouldn’t cost state taxpayers any money. In fact, they argued it would save money. Unfortunately, none of these projections came true.

As I also mentioned in part one of this series, prior to the pandemic, Missouri’s Medicaid enrollment was around 850,000, with about 520,000 of those being kids. Within one year of expansion being implemented (October 2022), Missouri’s Medicaid enrollment had ballooned to 1.4 million with 288,000 adults in the “newly eligible” expansion population. Today, with COVID safely in the state’s rearview mirror, program enrollment is still nearing 1.3 million total with 340,000 adults enrolled as a result of the expansion of eligibility requirements. The only Medicaid eligibility category that has seen a decline in recent years is that of people with disabilities—but that is a topic I’ll discuss in greater detail in the next post in this series.

To quickly summarize the impact of expansion thus far, enrollment has exceeded projections by around 35 percent, and current program costs are approximately 75 percent ($7.8 billion) higher than they were in 2019. The prediction that Medicaid expansion would be costless relied on Missouri being able to shift a significant portion of its costs to the federal government, which would in turn have saved state taxpayers money. Thus far, this has not been the case as Missouri taxpayers’ contribution to the state’s Medicaid program has grown by 74 percent ($1.6 billion) over the same period.

While hindsight is 20/20, it’s fair to say that the current problems with Missouri’s Medicaid program were predictable four years ago. Further, there’s no longer any reason to think today’s data represent anything other than the new normal for the program. It’s time to accept that Missouri voters were sold a bill of goods on Medicaid expansion, and it’s incumbent on our state’s elected officials to explore whatever actions are possible in the coming years to fix the problems that expansion has created.

The post Medicaid’s Checkup: Part 2 appeared first on Show-Me Institute.

For years, I’ve written about how big of a problem the Medicaid program is for Missouri’s budget. More recently, I’ve discussed our state’s broader budgetary troubles. Medicaid has long been Missouri’s single largest budget item, and the size of the program continues to only increase. Since 2020, program enrollment has increased by more than 40%, with more than 1.4 million Missourians now on the rolls. Additionally, Medicaid’s total cost has grown by nearly 80% in just four years, from approximately $10.8 billion to $19 billion.

One saving grace over this period of skyrocketing growth is that state taxpayers have been spared from the brunt of the cost increases due to an enormous injection of federal funds. This doesn’t mean that state taxpayers aren’t paying more for Medicaid today than ever before. In fact, state spending on the program has increased by more than 70% since 2020. But during that time, Missouri also experienced a tremendous run of state revenue growth, which, taken together with the increased federal funding, has meant that Missouri’s lawmakers have staved off addressing the long-running Medicaid cost problem. Going into next year, things are going to change drastically.

The federal government has ended its “enhanced” pandemic-era match for Medicaid funding. Typically, the federal government pays roughly 65% of Medicaid enrollee’s healthcare bills, but from 2021 until very recently, Missouri has received an additional 5% for adopting Medicaid expansion, and an additional 6.2% to help cover the increased program costs from the pandemic. Missouri lawmakers will have to replace the extra federal funds with state tax dollars.

This means that, without action, state lawmakers should expect the general revenue cost of the Medicaid program to increase significantly next year, likely by at least several hundred million dollars. And given that recent reports suggest that state tax revenue growth is expected to remain relatively flat, it’s possible the cost of Medicaid might even increase by more than the state’s tax collections. If that were to happen, unless reforms were made to the Medicaid program, significant budget cuts to other state spending priorities such as education, roads, or public safety would be needed to finance Medicaid’s cost growth.

Unlike the COVID-19 pandemic, the coming budgetary shortfall is entirely predictable. The federal government gave states more than a year’s warning for when it would be reducing Medicaid payments, but Missouri’s elected officials have thus far chosen not to prepare for that reality. Successfully reforming Medicaid will take months to implement, which means that time is running out if policymakers want to make the changes necessary to steer our state clear of the budgetary shortfall that’s ahead. Let’s hope state lawmakers realize this sobering truth before it’s too late.

The post Beware the Medicaid Hole appeared first on Show-Me Institute.

As my colleague Patrick Tuohey recently wrote, the rosy budgetary picture painted by Governor Parson during his final State of the State address was, at best, misleading. Missouri’s budget has nearly doubled over the past five years, and the governor’s more than $50 billion recommended spending plan for next year requires dipping into cash reserves to make ends meet.

In other words, it will be up to Missouri’s General Assembly to begin turning the tide on government spending, which will likely be easier said than done for several reasons.

First, the federal government is winding down its COVID-19 and infrastructure spending. This means that unless Missouri begins scaling back the services that have been propped up with federal cash, state taxpayers can expect to soon be on the hook for a higher level of government services than they were just a few short years ago. While the reduced federal funding will impact some parts of state government more than others, the Medicaid program is sure to need hundreds of millions of new state tax dollars.

Second, state tax revenues aren’t expected to grow at the rate they have in recent years. Fortunately, higher revenue collections over the past few years allowed Missouri to accumulate significant cash reserves, but some of those reserves have already been spent and the governor’s budget recommends spending more. There should be no expectation that Missouri’s tax revenue growth or remaining cash reserves will be able to fill the budgetary hole the federal government leaves behind, let alone cover the inflationary cost increases required to continue funding the state’s other spending priorities.

Given the harsh budgetary realities Missouri is facing, it’s especially troubling that Governor Parson and the general assembly are reportedly considering expanding the state government’s role even further. For example, Governor Parson is recommending funding—in a budget that relies on one-time cash reserves to maintain balance—childcare and teacher pay programs that will likely become new long-term spending obligations.

In a perfect world, Missouri taxpayers wouldn’t have to ask their elected officials to be good stewards of the state’s finances. Policymakers would prepare for rainy days and take future spending obligations into account when they craft the yearly budget, ensuring the state’s revenues and spending are on sustainable trajectories. Unfortunately, that doesn’t appear to be happening right now. For now, Missourians are going to be left hoping that something changes between now and the end of the legislative session.

The post Missouri Needs Better Stewards appeared first on Show-Me Institute.

If enacted, House Bill (HB) 519 would require the state’s department of revenue to develop a mobile application for claiming gas tax refunds, which is what I suggested the state do back before the program began. The idea of keeping track of gas receipts for a whole year to fill out a form and mail it to Jefferson City always seemed like more work than the refund would likely be worth to most Missourians. That’s why I think having an easy process for registering gas purchases at the point of sale and submitting those receipts through an app for refunds would be a real game changer.

Additionally, the bill would get rid of the arbitrary window for filing rebates. As much as I’d like to think most Missourians enjoy following the state’s budget along with me every year, I don’t think the end of the state’s fiscal year (which is the current deadline for filing gas tax refunds) represents an obvious time for most to be filing tax documents. Expanding the window to allow gas receipt submissions through the app all year, as well as when individuals file their taxes in April, would likely make things much more convenient for those interested in claiming a refund.

Finally, the bill allows taxpayers who don’t want to mess with tracking gas receipts to claim a “standard refund,” which will offer a specified amount as a credit against the individual’s income tax liability. For the 2023 tax year, the standard refund would be $30. But by 2026 and every year after, when the gas tax hike is fully ramped up, the refund would be $75.

As I explained previously, if the legislature really wasn’t trying to raise taxes on Missourians without their input, the refund portion of the gas tax hike should be simple enough that most taxpayers feel they can reasonably take advantage of the refund opportunity. Based on the data from the refund’s first full year, I’d say that was not the case. While HB 519 is not perfect, I think it goes a long way toward demonstrating the state’s commitment to the law enacted by the legislature. I, for one, would appreciate a better way to reclaim my tax dollars.

The post A Better Way to Pay? appeared first on Show-Me Institute.

The post Missouri’s Tax Landscape: 2022 appeared first on Show-Me Institute.

Beetem’s decision was in response to a lawsuit from the initiative’s supporters, which was filed after Missouri’s legislature decided against appropriating funding for Medicaid expansion. Governor Parson then halted all state implementation efforts.

As I explained last month, Missouri’s constitution gives the state legislature the responsibility of appropriating all state spending. It also provides that amendments cannot impose new costs without providing a mechanism to pay for them. Yesterday’s ruling holds that the expansion initiative failed to include a funding mechanism, and that growing the state’s Medicaid program by an estimated 275,000 enrollees will cost the state money. (The decision mentions that expansion would cost $1.8 million per year which is almost surely a typo; it should be $1.8 billion, as projections from Missouri’s Medicaid agency show.)

Prior to last August’s election, a different lawsuit challenged the constitutionality of the expansion petition on the same legal grounds. As Beetem’s decision explains, the courts at the time decided against removing the initiative from the ballot in part because the fiscal estimates showed a wide range of potential outcomes, from enormous savings to extraordinary costs. If the amendment did end up saving the state money, it wouldn’t need a funding mechanism. As I wrote repeatedly last year, the promise of savings was always illusory Once the true cost of expansion was presented to the legislature, legislators refused to appropriate funding citing their sole constitutional authority on the issue.

The plaintiffs certainly disagree with the circuit court’s ruling and have already filed their appeal. While it may be weeks or months until this issue is ultimately resolved, Judge Beetem’s decision is an important one with implications beyond this particular fight. If a petition to amend our state’s constitution violates the constitutionally defined rules for amending the constitution, it should not stand. It’s really that simple. Time will tell if the Missouri Supreme Court agrees as well.

The post Judge Strikes Down Medicaid Expansion appeared first on Show-Me Institute.

Missouri’s savings account, or rainy-day fund, was created more than two decades ago to serve two purposes: provide the state government with short-term liquidity (cash flow) and help stabilize the state’s budget whenever there’s an unexpected shortfall (emergency). On average, Missouri spends a little more than $800 million in state tax dollars every month. With such significant spending obligations, it’s relatively common for the timing of revenue collections and immediate spending needs to not perfectly align. When this happens, the state’s budget administrator can authorize the transfer of some funds from the rainy-day account to help fill the short-term cash-flow gap. The only requirement is that the amount borrowed must be repaid to the fund by May 16th of the current fiscal year. So long as the cash-flow needs are truly short term, the fund can be reliably used for this purpose.

When the disparity between revenue collections and spending obligations are longer term—for example, during a recession or pandemic—Missouri’s current rainy-day fund is much less useful. The fund has a strict minimum and maximum balance, which can be problematic when times are bad. Each year, the fund typically has around $700 million at the beginning of the state’s fiscal year, before money is borrowed for cash flow. Missouri ranks in the bottom half of states for available savings, and during the 2008 recession state tax revenues declined by more than a billion dollars. In other words, the current fund is too small.

There are also strict rules about how the funds can be spent, and how they must be repaid. First, the governor must declare a state of emergency, or state expenditures must be reduced below their original estimates (which would happen if there was a revenue shortfall because Missouri’s budget must remain balanced at all times). Then the governor must request that the legislature approve emergency use of the fund, and the legislature must approve the proposed use by a two-thirds majority. Once approved, only half of the fund’s balance can be used for budget stabilization, and at least one third of the borrowed amount must be repaid by the following July 15th. In short, the fund is very hard to use.

The difficulty in using Missouri’s rainy-day fund for budget stabilization discourages lawmakers from calling on the fund in times of need. Its insufficient balance makes any effort even less worthwhile. While some of the limitations placed on the fund’s use are likely an effort to ward against improper overuse and needed, there’s a fine line between discouraging bad behavior and encouraging inaction. In fact, ever since this version of Missouri’s rainy-day fund was created in 1999, it’s never been used for anything other than cash-flow assistance.

The COVID-19 pandemic has illustrated the importance of governments preparing for rainy days. Ensuring Missouri’s rainy-day fund is something that can be reliably turned to when unforeseen events arise would help our state prepare for the future. I know I’d never sign up for a savings account like Missouri’s.

The post Better Preparation for a Rainy Day appeared first on Show-Me Institute.

The pandemic has already taken a serious toll on our government’s budget. The virus, combined with lockdowns and other restrictions placed on businesses, has drastically decreased economic activity, which in turn has lowered state and local tax revenues. For the fiscal year that ended on June 30th, Missouri’s collected 6.6 percent less in revenues than it did the year before. And this year, the governor has already restricted more than $400 million in state spending, indicating his budget staff believes the decline in tax revenues will persist for some time.

Over the past eight months, Missouri has been unable to spend hundreds of millions in state tax dollars that otherwise would have gone toward priorities such as education and public safety. At the same time, the cost of other state programs has increased as a result of the virus. It is true that some of these issues have been temporarily alleviated by generous federal relief efforts. But federal support cannot fill the hole created by COVID-19 for every state priority (the federal government places restrictions on where the money can be spent). More importantly, this funding is a short-term solution to a long-term problem.

Missouri was unprepared for the current situation in large part because state spending has been growing for years. We must also realize that it’s becoming increasingly likely the virus will be defeated before tax revenues return to pre-pandemic levels. For that reason, it’s time to start thinking about how our elected officials will respond once the state’s budget is no longer being propped up by federal aid.

In the coming months, Missouri’s policymakers should consider every option that could help contain the state’s runaway spending trajectory and shrink the size of government to match the revenue projections of the years ahead. There’s no doubt the task will be difficult, but it’s all but certain the cost of acting now will be lower than if we wait until it’s too late.

The post Special Session a Reminder of Budgetary Troubles appeared first on Show-Me Institute.

The Mercatus Center’s latest version of its State RegData project analyzes state-level regulations by running a program that counts the number of times the words and phrases “shall,” “must,” “may not,” “required,” and “prohibited” appear in each state’s regulations. These words usually translate to regulatory restrictions, as these phrases, when included in regulations, typically tell you what you can or cannot do.

These words appear 93,915 times in Missouri state regulations, which translates to roughly 93,915 regulatory commands in our state. That’s almost 94,000 times where the state is telling you what you can and cannot do!

As you can imagine, some of these 94,000 regulatory restrictions seem inconsequential, unnecessary, and even ridiculous. A retailer may not participate in the sales tax holiday unless more than 2 percent of its merchandise qualifies for the tax holiday. The dental board may not issue any temporary license to practice as a dental hygienist in Missouri, though many other licensed occupations allow temporary licenses. The possession or use of beer bongs is prohibited on some rivers in Missouri but not others. Is this really what the state needs to be regulating? These are just three of the 94,000 instances where Missouri controls the actions of its citizens. To make matters worse, this number only includes state-level regulations; regulatory restrictions can be placed at the county and municipal levels, too.

Regulations are more often than not just red tape that Missourians must fight through to live their lives, and 94,000 pieces of red tape sure is a lot to fight through! Missouri saw some regulatory reduction during the “No MO Red Tape” initiative, but generally bureaucrats are much quicker to add regulations than to take them away. Regulations compound to suffocate businesses and workers, controlling what they can do and taking their resources. Why is Missouri making it harder for Missourians to run businesses, earn a living, and live productive lives?

The post Missouri Tells You What to Do 94,000 Times appeared first on Show-Me Institute.

The Missouri Division of Professional Registration has provided a list of statutes and regulations that it is requesting to be waived due to the COVID-19 crisis. This twelve-page document contains requests from 17 different professional registration boards. The requests are all related to occupational licensing and require the governor’s approval.

Many requests have already been approved. Several licensed occupations, including optometrists and nursing home administrators, are now able to meet their license renewal requirements online, which was not allowed or limited before. Missouri pharmacies are now allowed to use pharmacists and pharmacy technicians that have out-of-state licenses and can seek assistance from out-of-state pharmacies. There has also been a huge reduction in restrictions on health care professionals, making it easier for them to practice and coordinate with others in the field.

The Division of Professional Registration is not alone in looking to change some rules. A few lawmakers requested that the Department of Public Safety waive the restriction on selling mixed drinks to go, and in an executive order, the governor ordered the “suspension of any prohibition of the sale of un-prepared food by restaurants to the public.”

These regulations make it harder for workers to get and keep jobs. But if lifting some of these regulations is helping consumers and businesses during this crisis, we should wonder if they’re necessary when things go back to normal. One can only hope that many of these changes will stick, and we will continue to have fewer business regulations moving forward.

The post Missouri is Lessening Regulations, and Hopefully It’ll Stick appeared first on Show-Me Institute.

The Mercatus project to analyze state-level regulation is a continuation of the state-level analysis on regulations conducted in Missouri for the No Mo Red Tape campaign initiated under Gov. Greitens. Mercatus says of the effort,

Mercatus researchers Patrick McLaughlin and Oliver Sherouse created QuantGov, an open-source policy analytics platform designed to help create greater understanding and analysis of the breadth of government actions. The platform allows researchers to quickly and effectively examine bodies of text using some of the latest advances from data science, such as machine-learning and other artificial intelligence technology.

The top-regulated industries in Missouri are utilities followed by ambulatory health care and chemical manufacturing. Only three other states bordering Missouri have utility regulation in their top ten, and they are much further down on the list (Kentucky 7^th, Tennessee 7^th, Iowa 8^th). It would be interesting to learn why Missouri regulated utilities so much more than our neighbors and the degree to which that might be driving up utility rates in Missouri.

While this study does not explicitly make the link, it is generally understood that regulation drives up cost. The difficult work is to determine which regulations are necessary and what costs are reasonable. Researchers and policymakers looking for more efficient ways to regulate may find this data useful.

The post Missouri in the Middle on Regulations appeared first on Show-Me Institute.

At the heart of our efforts is one of economic growth. Our message that Missouri is open for business cannot be just lip service coming from this building (the Capitol). The policies we pass must focus on cultivating employers and not controlling their businesses,” Haahr tells the House….

Haahr also focused on conservative policies during his address, saying that “gone are the old ways of thinking that public money alone can end our problems.” He tells the House that Missouri has passed a balanced budget without raising taxes for 15 years that “that will not change on our watch.

Other items, including some health care and transparency reforms, appear to have some inertia behind them, but time will tell what eventually makes the cut and can find a pathway through the Senate.

On the other side of the building, Senate President Pro Tem Dave Schatz laid out a similar vision as that of the House, focusing on employment growth and job training. A recent St. Louis Public Radio piece outlined his agenda:

We face an economy that is very different than the one many of us grew up in,” said Schatz, R-Sullivan. “Advanced, practical skills are the ticket to the middle class and economic prosperity. We need to invest in the citizens of our state by offering training opportunities, regardless of age and experience. And any Missourian that wants to better themselves through hard work and education should have their state as an ally.

What does seem clear is that both the House and the Senate are generally in step with Governor Mike Parson’s priorities of workforce development and infrastructure, particularly roadways. How the two chambers will come to an agreement on specific ways forwards is an open question; the Senate, for instance, may be more predisposed to use a new internet sales tax to fund some of these items—which as we’ve said before, should be a non-starter.

But all things considered, these are good starting places for state government to be beginning the year from. We’ll keep you posted on their progress or, heaven forbid, their lack thereof.

The post 2019 Legislative Priorities Generally Lining Up with Market Reforms appeared first on Show-Me Institute.

Missouri’s Constitution requires the state’s legislature to pass a balanced budget—meaning the government cannot budget to expend more funds than there are revenues. This requirement leaves our elected officials with difficult decisions each year, because the proposed budget increases for current state programs continue to outpace revenue collections. As lawmakers express concern regarding the revenue estimates assumed in the Governor’s budget recommendations, it is more important than ever to ensure that all state dollars are spent on worthy projects.

My new essay, “Missouri’s Budget: A Primer,” provides a step-by-step explanation of the state’s budgeting process and describes the measures available to elected officials when revenue collections exceed or fall behind the estimates used in the creation of the budget. The essay also includes two graphics that should make navigating the state’s budget more manageable. The first is a timeline outlining the budgeting process, and the second offers a list of topics to follow as the budget makes its way through the legislature.

Click the link below to read the entire essay.

The post Missouri’s Budget: A Primer appeared first on Show-Me Institute.

The post Policy Breakfast: No MO Red Tape appeared first on Show-Me Institute.

Over the years, we have marked the progress (or lack thereof) that Missouri has made by reporting new data on gross domestic product (GDP) released by the Bureau of Economic Analysis (BEA). If you pick out a single year’s data, Missouri seems to do okay. From 2015 to 2016, for instance, real GDP in Missouri increased at a 1.15 percent rate, ranking 31st out of the 50 states and the District of Columbia. Washington recorded the fastest growth rate, at 3.7 percent. It was a bad year for states that rely on natural resources: Louisiana, West Virginia, Oklahoma, Wyoming, Alaska, and North Dakota all reported declines in real GDP from 2015 to 2016. So, it looks like the recent decline in oil and coal prices helped push Missouri up into the middle of the pack. For reference, in the United States as a whole, reported real GDP increased at a 1.54 percent rate in 2016—much faster than in Missouri.

But year-over-year data doesn’t reveal larger, more important economic trends; any given year can be dominated by business cycle fluctuations. Growth is focused on long-term trends. When you look at the entire 1997–2016 period, the picture is quite different from 2015. Little wiggles in the year-over-year data get smoothed out and show the economic fundamentals operating within a state. Over the full two-decade period, we see that Missouri’s growth has been paltry.

During this period, Missouri has grown at half the pace of the United States as a whole (1.024% compared to 2.05%). Out of all 50 states and the District of Columbia, Missouri ranks 48th in economic growth; we trailed Mississippi by 0.001%—we were almost 47th. For an idea of the impact of Missouri’s poor performance, imagine you and a friend had started at the same job in 1997, each making $50,000 a year. If your friend’s salary grew at the rate of the country as a whole, and yours grew at Missouri’s rate, the friend would have made about $72,800 in 2016 while you’d have made roughly $60,400!

In a recent essay, Joe Haslag and Michael Austin identified some policies that could help explain why Missouri took a nosedive after 1997. There was the corporate income tax rate hike in 1993. There was a shift of spending from education and infrastructure to social services. There was the sharp increase in the state’s tax credit programs. And, though more difficult to measure, there was the regulatory burden that seems only to have increased over time. (Do you remember a time when the state government eliminated a regulation?)

The bottom line is that state government needs to take a thoughtful approach to policy if it is to boost economic growth. Lower tax rates, for example, result in higher returns on capital and labor. The state should look for high returns on its own investments as well, just like a private citizen or business would. Common-sense adjustments to emphasize education and infrastructure over policies that transfer wealth from one group of citizens or businesses to another are needed unless Missouri’s policymakers are satisfied with 47th place.

The post Almost 47th appeared first on Show-Me Institute.

SJR 18 has two parts. The first part would increase the state’s regular fuel tax by 1.5 cents per gallon and the state’s diesel fuel tax by 3.5 cents per gallon. This increase has the potential to net MoDOT around $60 million in additional revenue annually, which would put off any immediate funding crisis for the state.

However, SJR 18 is different from other fuel tax increase proposals in that it also contains provisions for transferring responsibility for the state’s “supplementary” highway system to localities. The supplementary system is mostly made up of the state’s letter routes, but also includes urban streets like Gravois Road in Saint Louis and MO Route 283 in Kansas City. We’ve discussed before how these routes eat up a significant portion of MoDOT’s budget. These types of roads are maintained by counties and municipalities in most other states.

SJR 18 would not simply hand off the supplementary highway system to localities without any aid. The state would continue to provide localities with financial support for the transferred roads (fixed at the average spending of the last three years on that road). This means that in the short-term, MoDOT would spend the same amount on these highways as it does today. However, over the long term this spending would be capped, with local governments responsible for increased investment.

SJR 18—which would require a vote of the people before being enacted—is an interesting policy proposal that addresses both short-term and long-term financial problems at MoDOT. It does not encompass a large tax increase, and instead focuses on capping long-term spending as a method of setting MoDOT’s funding on firm footing.

The post New Bill Would Raise Missouri Fuel Tax, Cut Highway Miles appeared first on Show-Me Institute.

In a couple of weeks’ time, incoming college freshmen will get their first taste of independence. But with independence comes responsibility, and right about now parents are giving familiar advice on how to handle life without a safety net: Study for class. Eat healthy. Spend smart (read: don’t spend your rent money on pizza and beer). Most freshmen will find their footing, eventually. Some never really do, especially when it comes to budgeting properly.

But unrepentant spendthrifts should not feel so bad, because many of Missouri’s top policy makers never figured out how to spend smart, either.

A handful of state and Saint Louis officials want to spend close to $400 million of public money on a new football stadium in downtown Saint Louis in an effort to keep the Rams from moving to Los Angeles. Not only is Saint Louis’s existing NFL stadium, the Edward Jones Dome, a mere 20 years old, but virtually every economist who has studied the issue has found that NFL stadiums are a bad place to invest public dollars. They do not generate economic growth, spur urban revitalization, or greatly increase tax revenue.

Unfortunately for Missouri residents, the way Saint Louis funds its football stadiums makes this much more than a local or regional issue. Statewide residents already covered half the cost of Saint Louis’s Edward Jones Dome. In fact, the state is still paying $12 million annually on that stadium’s debt. One could be forgiven for thinking that Missouri taxpayers deserve a break from funding entertainment venues in Saint Louis City, especially when tangible economic benefits are so unlikely. But that’s not the case. Quite to the contrary, state taxpayers will be expected to cover more of the stadium costs than they did last time, with total state support topping $300 million—about three quarters of the total subsidy. That money will come straight from Missouri’s general revenue.

However, even as Missouri and the City of Saint Louis prepare to spend lavishly, yet again, on pro sports, every level of government claims it is broke. We are told how courthouses are crumbling. How highways are deteriorating. How the schools are underfunded. How the state parks have a $400 million maintenance backlog. How Missouri’s Amtrak routes need $32 million in upgrades to continue running. Even Saint Louis City officials claim that core departments like fire protection and police are short of cash.

When it comes to basic government services, there’s never any money in the budget. Residents instead have to vote on tax increases, or else. But when Saint Louis’s NFL status is threatened, hundreds of millions of dollars are suddenly available. As for a vote, that’s restricted to those who will vote “yes.” At the state level, it’s likely that the decision of the governor alone will be sufficient to authorize spending more than $300 million, and he is spearheading the stadium effort.

Right now, Missouri’s leaders sound a lot like college students calling their parents because they can’t afford groceries. And they’re making that call from a noisy bar in Cancun. It’s true—some people never learn to spend responsibly, whether they are freshmen or officials. Then again, most of the time, that’s because no one ever makes them.

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